August 23, 2004
In the Matter of the Petition by
ANTHONY ROYAL
76315 Ashland Drive
at
Rosedale, LA 70772-3832
P.S. Docket No. DCA 04-73
APPEARANCE FOR PETITIONER:
Dennis Sherfy
National Association of Postmasters
4582 Moccosin Place
Greenwood, IN 46142-7306
APPEARANCE FOR RESPONDENT:
Nina A. Moreau
Labor Relations Representative
United States Postal Service
P.O. Box 262100
Baton Rouge, LA 70826-9998
FINAL DECISION UNDER THE DEBT COLLECTION ACT OF 1982
Petitioner, Anthony Royal, filed a Petition for Hearing after receiving two Notices of Involuntary Administrative Salary Offsets, both dated May 3, 2004. These Notices stated the Postal Service's intention to withhold a total of $28,067 from Petitioner's salary to recover shortages in two accounts for which Petitioner was accountable.
A hearing was held in Baton Rouge, Louisiana on July 21, 2004. The Postal Service presented testimony from the acting Manager of Post Office Operations, a former Manager of Post Office Operations, a financial analyst, a Postal Inspector, and a subordinate supervisor in Petitioner’s post office. Petitioner testified in his own behalf and both sides relied on documents that had previously been filed. Also, Respondent presented two additional documents during the hearing. The following findings of fact are based on the entire record.
FINDINGS OF FACT
1. At the time pertinent to this case, Petitioner was the postmaster at Plaquemine, Louisiana. He had held that position for approximately ten years. (Tr. 111).[1]
2. For some period of time before 2001, the customer services supervisor in Petitioner’s office, Ms. Johnson, was the custodian of the unit reserve stock at Plaquemine. At some time in 2001, the unit reserve account was formally transferred to Petitioner. An audit was performed and the account was in balance at that time. During the time pertinent to this case, the vending machine account was also assigned to Petitioner. (Tr. 35, 93-94).
3. In April 2002, Petitioner left the office for an extended period for knee surgery. On the day before leaving, he printed an inventory list of the unit reserve from the POS computer system and left this list for the supervisor, Ms. Johnson. They did not do an audit of the unit reserve together, Ms. Johnson signed nothing to indicate that she was assuming custody of the unit reserve, and there are no documents that show what amount was in the unit reserve account at that time. Petitioner gave Ms. Johnson his password, or identification code, so that she could access the unit reserve account in the POS system. It is unclear whether this was done just prior to Petitioner’s departure, or at some earlier time. Ms. Johnson already had physical access to the unit reserve because she had access to the vault keys that Petitioner kept in his office. (Tr. 25, 49, 60-61, 64, 89-92, 100-01, 107, 113).
4. During Petitioner’s absence, which lasted until approximately March 2003, Ms. Johnson was in charge of the Plaquemine Post Office, although no formal transfer of authority or of any specific accounts ever took place. For a short time during this period, apparently during December 2002, Ms. Johnson was away from the office and a supervisor from another post office, Ms. Anderson, filled in for her. During this time, Ms. Anderson also had access to the unit reserve stock and the unit reserve account on the POS system. (Tr. 41-42, 55, 74-75, 92, 97-98; Pet. Ex. 1).
5. Petitioner took back control of the unit reserve in approximately October 2003. There was no audit done and no formal transfer from Ms. Johnson to Petitioner, but Petitioner counted the unit reserve stock by himself and noted a shortage in excess of $20,000. He did not inform the finance office or any higher level supervisor. (Tr. 11, 61-62, 94, 96, 108-09; PS Ex. 6).
6. In late February 2004, a team from the Postal Service Inspector General’s Office conducted an unannounced random audit of the Plaquemine Post Office. They found many discrepancies in the financial management of the office, including a large shortage in the unit reserve.[2] They reported this to the Acting Manager of Post Office Operations, who then asked the District Finance Office to send someone to Plaquemine to perform another audit to review and verify the findings of the IG team. (Tr. 10; PS Ex. 1).
7. The IG team reported a shortage of $22,348 in the main stock,[3] and a shortage of $5,719 in the vending stock. On or about March 1, 2004, Mr. Waymire, an internal control analyst from the District Finance Office, along with Petitioner, conducted an audit of the unit reserve. Their count showed the same shortage as the IG team reported. Mr. Waymire also audited the vending account and found the same shortage as did the IG team. (Tr. 21-24, 51; PS Exs. 1 and 5).
8. Postal Service Handbook F-1, Post Office Accounting Procedures, November 1996, Updated with Postal Bulletin Revisions Through March 18, 2004,
contains the following provision pertinent to this case:
Section 14 Liability for Financial Losses
When an accountable financial loss occurs and evidence shows that the postmaster or responsible manager enforced U.S. Postal Service (USPS) policies and procedures in managing the post office, the Postal Service grants relief for the full amount of the loss. When evidence fails to show that the postmaster or responsible manager met those conditions, the Postal Service charges the postmaster or responsible manager with the full amount of the loss.
(PS Ex. 4).
9. When acting as the custodian of the main stock, or unit reserve, postmasters, as are other employees assigned stamp accountabilities, “are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties.” (Handbook F-1, §141; PS Ex. 4).
10. Section 48 of Handbook F-1 covers the rules and procedures applicable to offices with Segmented Inventory Accountability (SIA), as Plaquemine is. This section speaks often of the “responsibility” of all employees for complying with prescribed procedures and protecting the security of postal property and assets. It also speaks of the “accountability” of specific employees for specific items. The following sections are pertinent. The first part of section 482.2 refers to the responsibility of all employees to ensure “financial integrity,” and other matters, then states:
“Employees are accountable for:
· Cash directly assigned to them.
· Money order stock directly assigned to them.
· Stamp stock directly assigned to them.”
483 Unit Reserve Responsibility
***
3> The individual assigned to the unit reserve is referred to as the unit reserve custodian. The unit reserve custodian is directly accountable for the value of all items in the unit reserve stock.
11. Section 421 of Handbook F-1 is titled, “Transfer of Accountability.” Under a heading titled, “Action for Postmasters or Unit Managers,” it directs that the main stock or unit reserve should be transferred when the custodian “is scheduled to be absent for a period during which access to the main stock [unit reserve] may be necessary."
12. Postal Service Handbook P102, Self Service Vending Operational and Marketing Program, May 1999, Updated with Postal Bulletin Revisions Through April 29, 2004, states, in the sections dealing with shortages:
643 Shortages
***
643.12 Other Operational Problems
Servicing personnel do not have complete control, at all times, of the assigned credit; therefore, shortages must be assumed to be the result of machine malfunction, unless the following can be determined:
a. Fire, theft, robbery, errors on PS Forms 17, Stamp Requisition, customer refunds, acceptance
of bogus and/or foreign coin-like and bill-like objects, or any other procedural errors.
b. The loss was the direct result of negligence on the part of the servicing personnel.
c. Theft, embezzlement, etc., by the servicing personnel with sufficient evidence to prefer charges.
13. On April 13, 2004, Petitioner was issued two letters of debt determination stating that he owed the Postal Service $22,348 and $5,719, and on May 3, 2004 he was issued two Notices of Involuntary Administrative Salary Offsets for the same amounts. (First Notice attached to Petition; Second Notice is PS Ex. 7).
DECISION
The standard for determining an employee’s liability for a unit reserve shortage provides that employees to whom postal funds and accountable paper are consigned “are held strictly accountable for any loss unless evidence establishes that they followed the postal procedures established when performing their duties.” Handbook F‑1, §141.
Respondent’s burden of proof in a case of unexplained shortage is to show that a loss occurred from an account for which the employee is accountable. Respondent is not required to prove any specific dereliction, or act of negligence, by Petitioner. When a properly conducted inventory, or audit, shows a stock shortage relative to a previously established balance, this constitutes proof of loss unless other evidence raises sufficient doubt about the accuracy of the inventory or the previously established balance, or otherwise suggests that there may have been no actual loss.
Respondent‘s contention is that the audits conducted by the IG team and by Mr. Waymire establish the losses alleged, that Petitioner was the assigned custodian of both the unit reserve and the vending account, and that there is no evidence to establish any basis for relieving him of liability. Respondent also points to several examples of Petitioner’s failure to follow prescribed regulations in conducting audits and maintaining records, to show that he had not “enforced U.S. Postal Service (USPS) polices and procedures in managing the post office,” as stated in Section 14 of Handbook F-1.
Petitioner does not dispute the accuracy of the unit reserve audits. Nor is there any evidence to suggest that there was no actual loss from the unit reserve. Therefore, Respondent’s evidence is sufficient to prove that loss. Petitioner’s principal contention is that his superiors had the responsibility to see to it that his unit reserve account was formally transferred to someone else before he left on sick leave in April 2002. He does not deny some of his failures to follow prescribed procedure, but argues that those who had control of the unit reserve in his absence also failed to follow rules. Therefore, because it is not known for certain when the loss occurred, he argues that he should not be held liable.
Petitioner also faults Postal Service authorities, including the Inspection Service, for not more actively pursuing an investigation into possible theft, rather than simply charging him with the loss.
Petitioner’s argument fails because it was his responsibility, not someone else’s, to formally transfer the unit reserve if he wished to protect himself from potential liability (see Finding #11). He testified that he thought the Manager of Post Office Operations was going to send someone to do an audit and transfer the account. Whether or not that is true, he knew this did not happen and he knew that the account was still assigned to him. To simply leave and relinquish control of the account to someone else, without conducting a formal audit and making a record of it was clearly improper and did nothing to change the fact that he was still personally accountable for it. Respondent’s evidence has proved a loss of $22,348 from the unit reserve account, and Petitioner has demonstrated no basis for relief from liability.
Respondent has not, however, proved liability for the alleged loss from the vending account. First, there were no documents presented to prove this loss and almost no testimony about it. Most important, however, is that the standard of liability for losses from vending machines, unlike losses from main stock or clerk credits, is not a strict liability standard. It requires evidence that the loss was caused by the negligence or wrongdoing of the assigned employee (see Finding #12). Andrea Quinn, P. S. Docket No. DCA 01-76/77 (June 14, 2001); Beverly M. Dennis, P. S. Docket No. DCA 97-107 (May 22, 2997). There is no evidence of theft or embezzlement by Mr. Royal, or that the vending loss was the direct result of his negligence. Respondent may not collect this alleged $5,719 debt from Petitioner.
The Petition is granted in part and denied in part. Respondent may collect $22,348 from Petitioner’s salary.
Bruce R. Houston
Chief Administrative Law Judge
[1] References to the hearing transcript are “Tr._.” Documents filed by Respondent with the Answer, in a supplemental filing, and at the hearing will be identified as “PS Ex._. Documents filed by Petitioner will be identified as “Pet. Ex._.”
[2] In addition to the unit reserve shortage, large shortages in the retail floor stock and vending stock were also found.
[3] The terms “main stock” and “unit reserve” mean the same thing in this case (Tr. 19).